CPA Australia has endorsed changes to the Australian Taxation Office’s (ATO) process for remitting interest and penalties.

However, the accounting body stressed that the reforms must lead to more consistent and empathetic decisions for taxpayers.

The ATO has introduced standardised forms and centralised processing for requests to remit the General Interest Charge (GIC), Shortfall Interest Charge and Failure to Lodge penalties.

CPA Australia tax lead Jenny Wong said the changes appear to respond directly to long-running issues raised by the Inspector-General of Taxation and Taxation Ombudsman.

“The ATO’s move to standardise and centralise interest and penalty remission requests is a welcome step toward greater consistency and transparency, particularly given concerns raised by the Tax Ombudsman and the tax professional community,” Wong said.

The Tax Ombudsman recently launched a review into the ATO’s administration of GIC remission, after complaints increased sharply.

The review is examining perceptions of a tighter ATO stance, limited visibility over how decisions are made and differing outcomes across ATO channels.

Wong said these issues have become more pressing with the change to the tax treatment of the GIC from 1 July 2025.

“With the GIC now non deductible, the financial impact of ATO decisions is much more significant for small businesses and individuals,” she said.

“That makes it critical that remission decisions are fair, predictable and clearly explained, especially where taxpayers have made genuine efforts to comply.”

Under the revised process, taxpayers and tax agents must use designated ATO forms for remission requests.

Applications will be handled by dedicated ATO teams.

The ATO has also published new guidance material including practical examples outlining when remission is likely to be allowed or refused.

“Clearer guidance and real-world examples should help taxpayers understand how the ATO is making its decisions,” Wong said. “For too long, taxpayers have been left guessing why similar circumstances can produce very different outcomes.”

Wong said specialist processing teams and clearer guidance could ease pressure on both taxpayers and tax and BAS agents.

“Tax professionals want to help their clients do the right thing, but inconsistent outcomes have made that increasingly difficult,” she said. “Dedicated teams applying the same criteria should go some way toward restoring confidence in the system.”

However, CPA Australia warned that procedural changes alone are not sufficient.

“The new forms and examples are a positive development, but the real test will be whether taxpayers experience more consistent and empathetic decision making,” Wong said. “There is a risk that standardisation becomes a box-ticking exercise unless it is matched with genuine discretion and common sense.”

CPA Australia also highlighted that the ATO has described the reforms as interim, pending a broader review of taxpayer relief provisions.

That review is running alongside the Tax Ombudsman’s inquiry, which is due to report in early 2026.

“We support efforts to improve transparency and consistency, but ongoing monitoring will be critical,” Wong said. “These changes must result in fairer outcomes for taxpayers – not just more paperwork or more rigid processes.”